Responsible Investment
A Practical Approach
Insurance-linked securities can play a role in global financial resilience by providing capital for post-event recovery. While natural catastrophe risk inherently intersects with climate dynamics and environmental factors, our portfolios are not managed as dedicated ESG, green, or impact strategies. Instead, physical risk data—such as meteorological variability, seasonal atmospheric drivers, and climate change—is incorporated into our proprietary view of risk.
Environmental and Social Context
Environmental dynamics, particularly physical climate risk, are a central part of investing in ILS. Because instruments in the asset class typically have shorter durations, Elementum’s primary focus is on nearer-term climate signals, evaluating environmental variability by applying proprietary, research-driven adjustments to standard vendor model output. Climatological factors like sea surface temperatures, atmospheric patterns, and near-historical event activity, as well as current seismological research and data, are combined with climate change, updated scientific consensus, and data on seasonal drivers to create a comprehensive view of risk.
Insurance-linked securities can also play a vital role in post-disaster recovery by providing the liquidity necessary for direct insurers to make their policyholders whole. This capital can support reconstruction efforts while also helping to maintain insurance capacity and accessibility, particularly in catastrophe-prone regions. While our portfolios are not managed as impact investments, this function highlights ways that ILS can serve as a broader contributor to economic resilience and social good.
Governance and Alignment
We believe that well-run counterparties are more likely to make good business partners. As such, thorough counterparty due diligence is one of many factors incorporated into our investment approach. While assessments are not made through an ESG lens, our counterparty due diligence process includes governance as one of many other contributing factors that inform our choices around counterparties with which we do business.
Elementum respects that many institutional investors operate with their own responsible investment priorities. We may be able to work with our clients to incorporate their parameters and exclusion lists into portfolio guidelines when feasible, integrating the clients’ ESG considerations into our portfolio compliance guidelines to the extent possible, while maintaining our core risk management approach.
Looking Forward
Elementum maintains a formalized Responsible Investment Policy designed to document our perspectives around ESG. As the responsible investment landscape for ILS continues to evolve, Elementum seeks to remain informed on advancements, standards, and industry best practices.
Explore Our Investment Approach